On October 1, 2024, Kristal Corp. issued ($ 700,000,5 %, 10)-year bonds at face value. The bonds

Question:

On October 1, 2024, Kristal Corp. issued $\$ 700,000,5 \%, 10$-year bonds at face value. The bonds were dated October 1, 2024, and pay interest annually on October 1. Financial statements are prepared annually on December 31 .

Instructions

a. Prepare the journal entry to record the issuance of the bonds.

b. Prepare the adjusting entry to record the accrual of interest on December 31, 2024.

c. Show the balance sheet presentation of bonds payable and bond interest payable on December 31, 2024 .

d. Prepare the journal entry to record the payment of interest on October 1, 2025.

e. Prepare the adjusting entry to record the accrual of interest on December 31, 2025.

f. Assume that on January 1, 2026, Kristal pays the accrued bond interest and calls the bonds. The call price is 104. Record the payment of interest and redemption of the bonds.

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Question Posted: Feb 28, 2024 04:00 AM

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On October 1, 2024, Kristal Corp. issued ($ 700,000,5 %, 10)-year bonds at face value. The bonds

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2024 a Oct 1 b Dec 31 Cash Bonds Payable Interest Expense Interest Payabl...View the full answer

Financial Accounting Tools For Business Decision Making

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